Apply the Efficient Market Hypothesis (Fama, 1970) to evaluate information incorporation in asset prices across weak, semi-strong, and strong forms.
SkillScore82Maintained
Automatic
◆Finance & Accounting pack
Last verified 8/28/2026
What it changes
Passed 18 of 22 test cases with the skill, and 13 of 22 without it.
Without skill59%
With skill82%
Checks it passed that the model alone missed
Uses the section header level ## EMH Assessment: for the title.
Identifies historical price patterns as the weak form information set.
Includes the evidence table column header Supports Efficiency? exactly.
and 9 more in the full report
8 fixed10 passed either way1 still failing3 broke
Pass-rate lift
+23 pp
Tokens
-5%
Agent turns
0%
Response time
-32%
Model gemini-3.6-flashMeasured 8/28/2026v118 of 22 cases passed with skill
Tokens, turns and time describe resource use, not a dollar price.
See it in action
One of 8 test cases the skill fixed. Same model, same prompt, with and without the skill.
1 of 8
Prompt
I'm reviewing a momentum-based technical trading strategy applied to large-cap equities. Can you evaluate this strategy against market efficiency principles? Please structure your analysis with a clear assessment title, specifying the exact efficiency form and information set tested. Include a table summarizing test methods, findings, and whether they support efficiency. Also list any relevant market anomalies and wrap up with a conclusion that accounts for the joint-hypothesis problem.
What was checked, without and with the skill
Checked
Without skill
With skill
Uses the section header level ## EMH Assessment: for the title.
Missed
Passed
Classifies technical analysis on past equity prices as testing weak form efficiency.
Passed
Passed
Notes that any test of efficiency is jointly a test of the asset pricing model used.
Passed
Passed
case-01 · gemini-3.6-flash · 8/28/2026 · answers are capped and redacted
What's inside
The instructions your model reads when the skill loads.
SKILL.md95 linessingle file
Efficient Market Hypothesis (EMH)
Overview
The Efficient Market Hypothesis (Fama, 1970) posits that asset prices fully reflect available information, making it impossible to consistently earn abnormal returns. EMH is organized into three forms — weak, semi-strong, and strong — each defined by the information set reflected in prices.
When to Use
Evaluating whether a trading strategy exploits genuine inefficiency
Designing event studies (semi-strong form test)
Assessing if active management adds value over passive indexing
Debating the validity of technical or fundamental analysis
When NOT to Use
As justification to ignore all market anomalies without investigation
When markets are clearly illiquid or informationally segmented
For normative claims — EMH describes price behavior, not what prices "should" be
Assumptions
IRON LAW: In an efficient market, prices reflect available information —
beating the market consistently requires either superior information
or accepting more risk. No free lunch.
Key assumptions:
Large number of rational, profit-maximizing participants
Information is costless and available simultaneously to all participants
Transaction costs do not prevent trading on information
Investors react quickly and unbiasedly to new information
Methodology
Step 1 — Identify the Information Set
Weak form: past prices and trading volume only
Semi-strong form: all publicly available information
Strong form: all information including private/insider information
Apply the Fama-French three-factor model to decompose asset returns into market, size, and value factors. Use this skill when the user needs to explain cross-sectional return differences, evaluate fund performance beyond CAPM alpha, assess small-cap or value tilts in a portfolio, or when they ask 'why do small caps earn more', 'is value premium real', or 'what factors drive returns'.